New Delhi opens door for foreign investment in Air India

11 January, 2018

SOURCE: Flight Dashboard

BY: Aaron Chong

Singapore

The Indian government has approved several amendments to the country's Foreign Direct Investment policy, including one that allows foreign airlines to control up to a 49% stake in state-owned Air India.

The cabinet decision was announced on 10 January. New Delhi says its intention is "to liberalise and simplify the FDI policy so as to improve ease of doing business in the country."

"This will lead to larger FDI inflows, contributing to growth of investment, income and employment."

Meanwhile, substantial ownership and effective control of Air India shall continue to remain with Indian nationals.

This format is followed by both Tata Sons' joint venture airlines, where Singapore Airlines has a 49% stake in Vistara and AirAsia a 49% stake in AirAsia India.

The move could increase Air India's attractiveness to foreign airlines, as New Delhi undergoes a process to divest the Star Alliance carrier.

Low-cost carrier IndiGo has stated its intention to acquire Air India's international operations, while Vistara's interest has been widely reported.

In 2015, Qatar Airways said that it was in talks IndiGo, but did not state the scope of the discussions and also quashed reports of a move to acquire a stake in SpiceJet.

IndiGo, however, confirmed that it was in preliminary discussions with Qatar “to explore potential marketing arrangements based on mutual interests”.